Petroleos Mexicanos et al v. Hewlett-Packard Company et al

MOTION to Dismiss

N.D. Cal.August 21, 2015

DEFENDANTS’ MOT. TO DISMISS FIRST AM. COMPLAINT; SUPPORTING MEMO. CASE NO.: CV-14-05292-BLF 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DANIEL J. BERGESON, SBN 105439, dbergeson@be-law.com CAROLINE MCINTYRE, SBN 159005, cmcintyre@be-law.com JOHN D. PERNICK, SBN 155468, jpernick@be-law.com BERGESON, LLP 2033 Gateway Place, Suite 300 San Jose, California 95110 Telephone: (408) 291-6200 Facsimile: (408) 297-6000 GEORGE T. CONWAY III, appearance pro hac vice gtconway@wlrk.com CAROLINE A. OLSEN, appearance pro hac vice caolsen@wlrk.com WACHTELL, LIPTON, ROSEN & KATZ 51 West 52nd Street New York, New York 10019 Telephone: (212) 403-1000 Facsimile: (212) 403-2000 Attorneys for Defendants Hewlett-Packard Co. and Hewlett-Packard Mexico, S. de R.L. de C.V. UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION PETRÓLEOS MEXICANOS, and PEMEX EXPLORACIÓN Y PRODUCCIÓN, Plaintiffs, v. HEWLETT-PACKARD COMPANY, and HEWLETT-PACKARD MEXICO, S. DE R.L. DE C.V., Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Case No. CV-14-05292-BLF DEFENDANTS’ NOTICE OF MOTION AND MOTION TO DISMISS THE FIRST AMENDED COMPLAINT; SUPPORTING MEMORANDUM Date: December 10, 2015 Time: 9:00 a.m. Courtroom: Courtroom 3, 5th Floor Judge: Hon. Beth Labson Freeman Case5:14-cv-05292-BLF Document72 Filed08/21/15 Page1 of 30 TABLE OF CONTENTS Page DEFENDANTS’ MOT. TO DISMISS FIRST AM. COMPLAINT; SUPPORTING MEMO. CASE NO.: CV-14-05292-BLF i 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 NOTICE OF MOTION AND MOTION TO DISMISS ................................................................. 1 STATEMENT OF ISSUES TO BE DECIDED ............................................................................. 1 MEMORANDUM OF POINTS AND AUTHORITIES ................................................................ 2 INTRODUCTION .......................................................................................................................... 2 FACTUAL BACKGROUND AND THE AMENDED COMPLAINT ................................................................................................................................. 5 1. “No improper payment.” .............................................................................................. 5 2. The revisions to Pemex’s complaint ............................................................................. 9 3. The deficiency of the “predicate acts” ........................................................................ 12 ARGUMENT ................................................................................................................................ 13 I. PEMEX’S RICO CLAIMS ARE STILL IMPERMISSIBLY EXTRATERRITORIAL. ..................................................................... 13 A. Pemex still alleges a pattern of racketeering activity that is impermissibly extraterritorial. ............................................................. 13 B. Pemex still alleges impermissibly extra- territorial losses. .......................................................................................................... 16 II. PEMEX STILL FAILS TO ALLEGE A PATTERN OF RACKETEERING ACTIVITY .................................................................. 17 A. Pemex still fails to allege a related “global scheme.” ...................................................................................................................... 17 B. Pemex still fails to allege open-ended continuity. ................................................................................................................... 18 C. Pemex still fails to allege closed-ended continuity. ................................................................................................................... 20 III. PEMEX’S RICO CLAIMS ARE TIME-BARRED. ........................................................... 21 IV. EVEN APART FROM PEMEX’S FAILURE OF PLEADING, THE COURT SHOULD DISMISS THE COMPLAINT IN LIGHT OF PEMEX’S ADMISSION THAT THERE WAS NO BRIBE. ............................................................... 23 CONCLUSION ............................................................................................................................. 25 Case5:14-cv-05292-BLF Document72 Filed08/21/15 Page2 of 30 TABLE OF AUTHORITIES Page DEFENDANTS’ MOT. TO DISMISS FIRST AM. COMPLAINT; SUPPORTING MEMO. CASE NO.: CV-14-05292-BLF ii 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Cases 5-Star Mgmt. Inc. v. Rogers, 940 F. Supp. 512 (E.D.N.Y. 1996) .................................................................................... 24 n.15 Ashcroft v. Iqbal, 556 U.S. 662 (2009) ................................................................................................................... 20 Alda v. SBMC Mortg., No. 11–cv–00678–LHK, 2012 WL 10589 (N.D. Cal. Jan. 3, 2012) ..................................................................................................... 25 n.16 Bao v. SolarCity Corp., No. 14–cv–01435–BLF, 2015 WL 1906105 (N.D. Cal. Apr. 27, 2015) ...................................................................................................... 7 n.2 Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) ................................................................................................................... 10 Cummings v. Harris, No. 14–cv–02539–BLF, 2015 WL 4552446 (N.D. Cal. July 28, 2015) ............................................................................................................. 5 Dreiling v. American Express Co., 458 F.3d 942 (9th Cir. 2006) .................................................................................................. 7 n.2 Eclectic Props. E., LLC v. Marcus & Millichap Co., 751 F.3d 990 (9th Cir. 2014) ................................................................................................ 12–13 European Cmty. v. RJR Nabisco, Inc., 764 F.3d 129 (2d Cir.), panel reh’g denied, 764 F.3d 149 (2d Cir. 2014) (per curiam), reh’g en banc denied, 783 F.3d 123 (2d Cir. 2015), pet. for cert. filed, No. 15–138 (U.S. July 27, 2015) ......................................................... 16 n.10 European Cmty. v. RJR Nabisco, Inc., 783 F.3d 123 (2d Cir. 2015), pet. for cert. filed, No. 15–138 (U.S. July 27, 2015) ....................................................................................... 16 n.10 Flint v. Beneficial Fin. I Inc., No. 12–cv–01675–GEB, 2012 WL 3277109 (E.D. Cal. Aug. 9, 2012) ................................................................................................... 24 n.15 Hourani v. Mirtchev, 943 F. Supp. 2d 159 (D.D.C. 2013), aff’d, No. 13–7088, 2015 WL 4590324 (D.C. Cir. July 31, 2015) ............................................................................................................ 15 Hourani v. Mirtchev, No. 13–7088, 2015 WL 4590324 (D.C. Cir. July 31, 2015) .............................................................................................. 12, 16 n.10 Howard v. Am. Online, Inc., 208 F.3d 741 (9th Cir. 2000) .............................................................................................. 19 n.11 In re Am. Cont’l Corp./Lincoln Sav. & Loan Sec. Litig., 794 F. Supp. 1424 (D. Ariz. 1992) ............................................................................................. 22 Case5:14-cv-05292-BLF Document72 Filed08/21/15 Page3 of 30 TABLE OF AUTHORITIES Page DEFENDANTS’ MOT. TO DISMISS FIRST AM. COMPLAINT; SUPPORTING MEMO. CASE NO.: CV-14-05292-BLF iii 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 In re Methyl Tertiary Butyl Ether (MTBE) Prods. Liability Litig., 959 F. Supp. 2d 476 (S.D.N.Y. 2013) .................................................................................... 7 n.2 Int’l Norcent Tech. v. Koninklijke Philips Elecs. N.V., No. 07–cv–00043–MMM, 2007 WL 4976364 (C.D. Cal. Oct. 29, 2007) ........................................................................................................... 10 L-3 Commc’ns Integrated Sys., L.P. v. United States, 91 Fed. Cl. 347 (2010), amended in part on reconsideration, 98 Fed. Cl. 45 (2011) ................................................................................................................. 23 Mattel, Inc. v. MGA Entertainment, Inc., 782 F. Supp. 2d 911 (C.D. Cal. 2011) ....................................................................................... 17 Mohebbi v. Khazen, 50 F. Supp. 3d 1234 (N.D. Cal. 2014) ....................................................................................... 18 Morrison v. Nat’l Austl. Bank Ltd., 561 U.S. 247 (2010) ................................................................................................................... 13 Ove v. Gwinn, 264 F.3d 817 (9th Cir. 2001) ...................................................................................................... 17 Pincay v. Andrews, 238 F.3d 1106 (9th Cir. 2001) .................................................................................................... 22 Reich v. Lopez, 38 F. Supp. 3d 436 (S.D.N.Y. 2014) ................................................ 13, 15, 16 n.10 Schneider Rucinski Enters. v. Stratasoft, Inc., No. 08–cv–138–WQH, 2009 WL 559827 (S.D. Cal. Mar. 3, 2009) ..................................................................................................... 19 n.11 Sever v. Alaska Pulp Corp., 978 F.2d 1529 (9th Cir. 1992) .................................................................................................... 19 United States v. Chao Fan Xu, 706 F.3d 965 (9th Cir. 2013) .................................................................................. 13, 15, 16 n.10 United States v. Kiewit Pac. Co., No. 12–cv–02698–JST, 2013 WL 5770514 (N.D. Cal. Oct. 24, 2013) ............................................................................................. 22–23 n.14 United States v. Kincaid-Chauncey, 556 F.3d 923 (9th Cir. 2009) ...................................................................................................... 17 Von Saher v. Norton Simon Museum of Art at Pasadena, 592 F.3d 954 (9th Cir. 2009) ............................................................................ 23 n.14 Statutes and Rules FED. R. CIV. P. 9(b) ........................................................................................................................ 13 FED. R. CIV. P. 12(b)(6) .................................................................................................................... 1 FED. R. EVID. 801 ........................................................................................................................... 23 18 U.S.C. § 1343 ...................................................................................................................... 12–13 18 U.S.C. § 1952(a) ....................................................................................................................... 12 Case5:14-cv-05292-BLF Document72 Filed08/21/15 Page4 of 30 TABLE OF AUTHORITIES Page DEFENDANTS’ MOT. TO DISMISS FIRST AM. COMPLAINT; SUPPORTING MEMO. CASE NO.: CV-14-05292-BLF iv 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 18 U.S.C. § 1956(a)(2) ............................................................................................................. 12–13 Inspector General Act of 1978, §§ 2–4, 5 U.S.C. App. 3 (2012) .......................................................................................................... 9 n.6 Ley Federal de las Entidades Paraestatales [LFEP], as amended, § 62, Diario Official de la Federación [DO], 14 de mayo 1986 (Mex.) ........................................................................... 8 n.5 Ley Orgánica de la Administración Pública Federal [LOAPF], as amended, §§ 37–VIII, XII, Diario Official de la Federación [DO], 29 de diciembre 1976 (Mex.) ................................................................................................. 8 n.5 Reglamento Interior de la Secretaría de la Función Pública §§ 79–80, Diario Official de la Federación [DO], 15 de abril de 2009 (Mex.) .......................................................................................... 8 n.5 Case5:14-cv-05292-BLF Document72 Filed08/21/15 Page5 of 30 DEFENDANTS’ MOT. TO DISMISS FIRST AM. COMPLAINT; SUPPORTING MEMO. CASE NO.: CV-14-05292-BLF 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 NOTICE OF MOTION AND MOTION TO DISMISS TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD: PLEASE TAKE NOTICE that on December 10, 2015 at 9:00 a.m. or as soon thereafter as counsel may be heard, in the courtroom of the Honorable Beth Labson Freeman, United States District Judge for the Northern District of California, located at the United States Courthouse, 280 South 1st Street, San Jose, California 95113, defendants Hewlett-Packard Company and Hewlett- Packard Mexico, S. de R.L. de C.V., will and hereby do move this Court for an order dismissing this action with prejudice. Defendants bring this motion under Rule 12(b)(6) of the Federal Rules of Civil Procedure on the ground that plaintiffs’ complaint fails to state a claim upon which relief may be granted. Defendants base their motion on this notice of motion and motion to dismiss this action; the supporting memorandum of points and authorities; the pleadings, records, and papers filed in this action; and such other arguments as defendants may present at oral argument. STATEMENT OF ISSUES TO BE DECIDED 1. Do Pemex’s amended RICO claims, which continue to allege a scheme perpetrated by foreign entities against foreign victims, and misconduct that allegedly occurred virtually entirely outside the United States and resulted in alleged injury outside the United States, “show plausibly,” as this Court put it in its July 13, 2015 opinion dismissing Pemex’s original complaint, that “Defendants engaged in a domestic scheme rather than just peripheral or isolated domestic acts”? July 13, 2015 Opinion (“Op.”) 17. 2. Do Pemex’s amended RICO claims, which continue to allege three entirely separate schemes perpetrated by different entities against different victims in different countries, with no plausible, factually supported allegation that these entities communicated with one another or knew of one another’s schemes, establish that the “schemes are sufficiently related to one another such that they could be considered part of a single ‘global scheme’”? Op. 18. 3. Do Pemex’s amended RICO claims, which continue to attempt to allege predicate acts that occurred, at most, from December 2008 through June 2009, if even that, plead a pattern of Case5:14-cv-05292-BLF Document72 Filed08/21/15 Page6 of 30 DEFENDANTS’ MOT. TO DISMISS FIRST AM. COMPLAINT; SUPPORTING MEMO. CASE NO.: CV-14-05292-BLF 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 racketeering activity constituting a “substantial period of time” or a risk “that similar conduct will occur in the future”? Op. 19, 20. 4. Are Pemex’s amended RICO claims time-barred under RICO’s four-year statute of limitations because Pemex “ha[s] not sufficiently pled facts to show that Reynaud and [Pemex’s] COO ‘completely abandoned’ Pemex,” and that they “were acting solely for their own personal benefit”? Op. 24. 5. Should the Court dismiss the complaint in its entirety in light of Pemex’s admission, in its most recent SEC Form 20-F filing, that there was “no improper payment” in connection with the BTO contracts? 6. Should the Court decline to exercise supplemental jurisdiction over plaintiffs’ state law claims if the Court has dismissed all claims over which it has original jurisdiction? MEMORANDUM OF POINTS AND AUTHORITIES INTRODUCTION There is little new in the amended complaint, and what little that is new does not matter. What the First Amended Complaint mostly adds is conclusions. That was the problem the first time around: This Court faulted the original pleading for, among many other things, “cursorily alleg[ing] that HP ‘directed the scheme’ from the United States”; “cursory pleading” as to how Reynaud’s trips were “inten[ded] to induce him to award Pemex contracts to HP” and were “quid pro quo for Reynaud’s signing of the contracts”; and “alleg[ing] in a cursory fashion that the “COO and Reynaud [] had abandoned their relationship” with Pemex and “were acting wholly for their own benefit and not also for the benefit of Pemex.” Op. 16 & n.4, 24–25. The new pleading doubles, triples, quadruples down on conclusory words—as the redline submitted here as Exhibit A amply shows. The supposedly new allegations about Reynaud’s trips and meetings, for example, illustrate Pemex’s cursory approach to repleading: The trips now allegedly were “designed … to groom and induce them to accept corruption and entirely abandon their employer.” First Amended Compl. (“FAC”) ¶ 3. “The purposes of this meeting were to Case5:14-cv-05292-BLF Document72 Filed08/21/15 Page7 of 30 DEFENDANTS’ MOT. TO DISMISS FIRST AM. COMPLAINT; SUPPORTING MEMO. CASE NO.: CV-14-05292-BLF 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 groom Reynaud Aveleyra to accept bribes ….” Id. ¶ 25. “The purposes of this trip were to groom Reynaud ….” Id. ¶ 26. “The purposes of this lavish trip were to groom Reynaud ….” Id. ¶ 27. “HP and HP Mexico intended this trip to groom Reynaud ….” Id. ¶ 153(a)(1). “The purposes of this extravagant trip were to plan and fuel the scheme and to further induce Reynaud ….” Id. ¶ 29. “The purposes of this trip were to plan and fuel the scheme and to further induce Reynaud ….” Id. ¶ 30. “[P]lan and fuel … and … further induce …” Id. ¶ 31. “[P]lan and fuel … and … further induce …” Id. ¶ 32. “[P]lan and fuel … and to induce ….” Id. ¶ 153(a)(2). “[P]lan and fuel … and to induce ….” Id. ¶ 153(a)(3). “[P]lan and fuel … and to induce ….” Id. ¶ 153(a)(4). Just more verbiage, incanted over and over again. That dependence on repetitious and conclusory embellishment should come as no surprise. Even Pemex’s core allegation of bribery—the $125,000 in payments by Intellego to Reynaud—boiled down to a legal conclusion. The material on which Pemex bases its claims— Exhibits 1 and 2 to the complaint, the DOJ and SEC resolutions—never referred to those payments as a “bribe,” even though, in contrast, the government used that word many times to describe what happened in Russia and Poland. And yet hundreds of times in this Court—73 times in its original complaint, 35 times in its opposition on the prior motion, and now 119 times in its new complaint—Pemex has used “bribe,” “bribery,” or some variant of the word to describe Intellego’s payments to Reynaud. Now it appears that Pemex takes its obligations under Federal Rule of Civil Procedure 11—and to this Court—far less seriously than it does its obligations under the U.S. federal securities laws and to its bondholders and noteholders. Pemex is wholly owned by the Mexican government, but it raises money from private investors who buy its debt. And so every year, Pemex files an extensive annual report with the SEC on the SEC’s Form 20-F. This year’s report, filed April 30, 2015, states the following about the central allegation in this case: On April 9, 2014, the SEC issued an order imposing sanctions against Hewlett-Packard Company (or HP) based on its findings that HP’s subsidiaries in Mexico, Russia and Poland made improper payments to certain public officials in order to obtain public contracts in violation of the U.S. Foreign Corrupt Practices Act. In the case related to Case5:14-cv-05292-BLF Document72 Filed08/21/15 Page8 of 30 DEFENDANTS’ MOT. TO DISMISS FIRST AM. COMPLAINT; SUPPORTING MEMO. CASE NO.: CV-14-05292-BLF 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Mexico, the sanctions related in part to allegations that Hewlett-Packard México, S. de R.L. de C.V., an HP subsidiary in Mexico, paid a Mexican information-technology and consulting company more than U.S. $1 million to win a software and licensing contract with Petróleos Mexicanos worth approximately U.S. $6 million. The SEC’s order alleged that a former officer of Petróleos Mexicanos received a portion of the HP subsidiary’s unlawful payment to the consulting company. The Internal Control Body of Petróleos Mexicanos concluded its investigation after finding no improper payment. Ex. B at 194 (emphasis added). After an investigation, “no improper payment.” No bribe. That binding, unambiguous admission should end this case. To comply with Rule 11, Pemex should voluntarily dismiss its case, and today HP has written Pemex to insist it do just that. But even if Pemex persists, and even if the admission in its SEC Form 20-F is disregarded, the Court should dismiss the amended complaint for the very same reasons it dismissed the RICO claims in the first complaint. Pemex still fails to allege a domestic scheme. The mishmash of additional allegations pleaded in the amended complaint add no domestic facts of substance to what was previously alleged in the original complaint. There are no new factual allegations establishing that “Defendants engaged in a domestic scheme rather than just peripheral or isolated domestic acts.” Op. 17. Like its predecessor, the amended complaint “only cursorily alleges that HP ‘directed the scheme’ from the United States,” and lacks the “widespread allegations of wrongdoing based in the United States” required to state a domestic civil RICO claim. Op. 13. Pemex also still fails to plead a pattern of racketeering activity. As to the alleged “global scheme,” Pemex adds a host of new legal conclusions, but it does not allege any new facts demonstrating “how the HP Poland and HP Russia schemes … are similar to the HP Mexico scheme.” Op. 19. As to continuity, the amended complaint still alleges a series of events that occurred over seven months at most, focused on a discrete business transaction, with two individuals who are no longer employed by Pemex. As the Court has previously held, these allegations in no way suffice to establish that “similar conduct will occur in the future.” Op. 19. And the complaint is still untimely. Reynaud’s and the COO’s knowledge must be imputed to Pemex, as there is still no factually supported allegation that these Pemex officials Case5:14-cv-05292-BLF Document72 Filed08/21/15 Page9 of 30 DEFENDANTS’ MOT. TO DISMISS FIRST AM. COMPLAINT; SUPPORTING MEMO. CASE NO.: CV-14-05292-BLF 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 were “acting wholly for their own benefit and not also for the benefit of Pemex.” Op. 25. No matter what, Pemex cannot avoid the fact that, while acting on behalf of Pemex, these officials secured a valuable contract for BTO services that HP did in fact provide. And Pemex has separately failed to allege any facts that could justify Pemex’s alleged ignorance of its injury after Reynaud’s June 2009 resignation, which followed public reports that he accepted a bribe from a different technology company. These pleading failures again require that Pemex’s RICO claims be dismissed. Given the policy underlying Rule 15 that leave to amend should be freely given, it was certainly understandable that the Court granted Pemex leave to amend after the last motion. But now it is abundantly clear that this case can and will go nowhere. Given the chance to replead, Pemex has come up with nothing but more conclusions, more speculations, and more arguments—but no facts that matter. In addition, Pemex has candidly told the world in its securities filings with the SEC—but not this Court—that it has nothing. Simply put, Pemex has now twice failed to state RICO claims for the simple reason that it cannot, and no amendment can cure that. “[F]urther leave to amend would be futile.” Cummings v. Harris, No. 14–cv–02539– BLF, 2015 WL 4552446, at *3 (N.D. Cal. July 28, 2015). Pemex should not be allowed to consume any more of this Court’s valuable time in its apparent quest to test the boundaries of permissible pleading. It is respectfully submitted that this case should end, once and for all, now. FACTUAL BACKGROUND AND THE AMENDED COMPLAINT 1. “No improper payment.” The amended complaint adds little, and the Court is already fully familiar with the case, so there is no need for a full factual rendition here. Nevertheless, before getting into the few differences between the original complaint and the new one, there is one preliminary, overarching point worth noting—a point that gives context to what Pemex has now told the SEC and the investing public. The new complaint, like the old one, contains only thin factual support even for its central Case5:14-cv-05292-BLF Document72 Filed08/21/15 Page10 of 30 DEFENDANTS’ MOT. TO DISMISS FIRST AM. COMPLAINT; SUPPORTING MEMO. CASE NO.: CV-14-05292-BLF 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 allegation: that the approximately $125,000 that Manuel Reynaud Aveleyra allegedly received from Intellego was a bribe for signing the BTO contracts, a bribe supposedly understood to be such by HP Mexico. See, e.g., FAC ¶¶ 58–60. The asserted factual basis for that claim, as before, is Exhibits 1 and 2 to the complaint, HP Mexico’s non-prosecution agreement with the DOJ, and the cease-and-desist order from the SEC. But neither of those documents states that Reynaud, or anyone else at Pemex, was “bribed.” Neither says that HP Mexico “bribed” Reynaud, or anyone else. To the contrary, all that the DOJ non-prosecution agreement said is that “HP MEXICO was able to circumvent HP Co.’s policies,” and that “HP MEXICO … circumvented HP Co.’s controls by failing to identify the role of INTERMEDIARY in the BTO Deal when seeking a 1.5% increase in the commission for CONSULTANT,” and that, as a result, “HP MEXICO’s books and records falsely reflected that the INTERMEDIARY was the deal partner.” FAC Ex. 1, at A6. Although the DOJ went on to note that “CONSULTANT” (Intellego) later made $125,000 in payments to Reynaud, id., the word “bribe” does not appear. Nor is there any allegation that HP knew about the payments. So too, with the SEC order. It said the same thing: that “by injecting the Pass-Through in the transaction, HP Mexico sales managers were able to evade HP’s policies requiring pre- approval of channel partners,” and that, as a result, “HP Co.’s books and records falsely reflected that the Pass-Through was the deal partner.” FAC Ex. 2, at 11. But again, while the SEC noted that “the Mexican Consultant [(Intellego)] made cash payments totaling approximately $125,000 to an entity controlled by Pemex’s Chief Information Officer [(Reynaud)],” id., the word “bribe” does not appear. Nor, again, is there any allegation that HP knew about the payments. In short, what the DOJ and SEC found and said, and what HP Mexico and HP admitted, was that HP Mexico improperly pulled the wool over HP (U.S.)’s eyes to get Intellego paid—not that HP Mexico actually paid a bribe. FAC Ex. 1, at A5; id. Ex. 2, at 10. What HP Mexico admitted was a violation of the FCPA’s internal-controls and books-and-records provisions—not the statute’s anti-bribery provisions. FAC Ex. 1, at A-3; see id. Ex. 2, at 2. Case5:14-cv-05292-BLF Document72 Filed08/21/15 Page11 of 30 DEFENDANTS’ MOT. TO DISMISS FIRST AM. COMPLAINT; SUPPORTING MEMO. CASE NO.: CV-14-05292-BLF 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Contrast that with what the SEC and DOJ had to say about HP Russia and HP Poland. The SEC cease-and-desist order repeatedly uses the word “bribe” to describe what happened in Poland and Russia. “HP Russia promised to pay and did pay bribes,” and HP Poland “provided gifts and cash bribes,” the order says. FAC Ex. 2, at 2, 3; see also id. at 4, 8. So, too, with the DOJ: in contrast to the non-prosecution agreement with HP Mexico, the DOJ filed actual criminal charges in this Court against HP Russia and HP Poland; it entered into a plea agreement with HP Russia, and a deferred prosecution agreement with HP Poland. The HP Russia and HP Poland agreements, filed in this Court, unreservedly use the word “bribe” to describe what HP Russia and HP Poland did.1 Still, despite the absence of any charge or admission that HP Mexico had actually paid a bribe, it was understandable that Pemex, and its sole owner, the Government of Mexico, would investigate the payments Reynaud received from Intellego. On May 15, 2014, a month after HP settled with the SEC, Pemex stated in its SEC Form 20-F that “[t]he SEC’s order alleged that a former officer of Petróleos Mexicanos received a portion of the HP subsidiary’s unlawful payment to the consulting company.” Ex. C at 188.2 Pemex then concluded: “As of the date of this report, we are conducting an internal investigation into the tendering of this software and licensing contract by Petróleos Mexicanos to HP’s Mexican subsidiary.” Id. (emphasis added). Now, as already noted, the results of Pemex’s internal investigation are apparently in.3 1 See Plea Agreement, Ex. 5, at 8, 10, United States v. ZAO Hewlett-Packard A.O., No. CR– 14–201–DLJ (N.D. Cal. filed Apr. 9, 2014) (Docket No. 2), available at http://1.usa.gov/1Po4clw; Deferred Prosecution Agreement, Attachment A, at 6, 7, 8, United States v. Hewlett-Packard Polska, Sp. z o.o., No. CR–14–202–EJD (N.D. Cal. Apr. 9, 2014) (Docket No. 2), available at http://1.usa.gov/1PaO5Hj. 2 The Court may take judicial notice of SEC filings on a motion to dismiss. See, e.g., Dreiling v. Am. Express Co., 458 F.3d 942, 946 n.2 (9th Cir. 2006); Bao v. SolarCity Corp., No. 14–cv–01435–BLF, 2015 WL 1906105, at *4 n.1 (N.D. Cal. Apr. 27, 2015) (“SEC filings … are appropriate for judicial notice because they are matters of public record not subject to reasonable dispute”); In re Methyl Tertiary Butyl Ether (MTBE) Prods. Liab. Litig., 959 F. Supp. 2d 476, 492 & n.141 (S.D.N.Y. 2013) (taking judicial notice of Form 20-F). 3 Defendants’ counsel were unaware of Pemex’s Form 20-F filing during the proceedings on the first motion to dismiss. Nonetheless, the Internal Control Body’s finding that there was “no Case5:14-cv-05292-BLF Document72 Filed08/21/15 Page12 of 30 DEFENDANTS’ MOT. TO DISMISS FIRST AM. COMPLAINT; SUPPORTING MEMO. CASE NO.: CV-14-05292-BLF 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 This year’s Form 20-F contained essentially the same paragraph, except the last sentence, which provides the conclusion of the investigation: “The Internal Control Body of Petróleos Mexicanos concluded its internal investigation finding no improper payment.” Ex. B at 194 (emphasis added).4 Pemex’s Chief Financial Officer, Mario Alberto Beauregard Álvarez, attested to the veracity of that statement, as well as the one in the prior year’s Form 20-F, by certifying that neither SEC filing “contain[ed] any untrue statement of a material fact or omit[ted] to state a material fact necessary to make the statements made … not misleading.” Ex. B at Ex.12.2, Ex. C at Ex. 12.2. Under Mexican law, Pemex’s Internal Control Body must investigate allegations of misconduct at Pemex, and must report to the Mexican government, Pemex’s sole owner, through the Ministry of Public Function.5 This process is akin to the work of inspector general offices found in U.S. government-controlled corporations and entities, such as Amtrak, the United States improper payment” was highly publicized in Mexico. In particular, El Finaciero, one of Mexico’s largest business and financial newspapers (if not the country’s largest), reported on Pemex’s Form 20-F with the headline “Pemex Exonerates HP of Megabribe.” See Edgar Sigler, Pemex Exonera a HP de Megasoborno, EL FINANCIERO, May 13, 2015 (emphasis added), http://bit.ly/1NycYON. Nor did it escape the Mexican press’s notice that Pemex’s Form 20-F flatly contradicts Pemex’s allegations in this suit. See id. (“La declaración se contrapone con una demanda iniciada por Pemex en contra de HP en Estados Unidos a finales del 2014, ….” [“The statement contrasts with a lawsuit filed by Pemex against HP in the United States in late 2014, …”]); accord Patricia Guerrero, Concluye Investigacion Sobre Corrupcion; Exonera HP, TERRA MÉXICO, May 13, 2015, http://bit.ly/1PlcKZY (similar headline and observation). 4 Pemex made the same admission in the annual report it filed with the Comisión Nacional Bancaria y de Valores, Mexico’s equivalent of the SEC. See Petróleos Mexicanos Reporte Anual para el año terminado el 31 de diciembre de 2014, at 132 (Apr. 30, 2015) (“El Órgano Interno de Control de la Emisora llevó a cabo una investigación sobre el procedimiento de contratación realizado en esta operación, cuyo resultado no acreditó el pago indebido.”). Pemex has posted that report on its website at http://bit.ly/1UIyqCF. 5 See Ley Orgánica de la Administración Pública Federal [LOAPF], as amended, §§ 37–VIII, XII, Diario Oficial de la Federación [DO], 29 de diciembre 1976 (Mex.), en relación con el artículo segundo transitorio de la LOAPF publicado en el DO el 2 de enero de 2013; Ley Federal de las Entidades Paraestatales [LFEP], as amended, § 62, Diario Oficial de la Federación [DO], 14 de Mayo 1986 (Mex.); Reglamento Interior de la Secretaría de la Función Pública [RISFP], as amended, §§ 79–80, Diario Official de la Federación [DO], 15 de abril de 2009 (Mex.). Case5:14-cv-05292-BLF Document72 Filed08/21/15 Page13 of 30 DEFENDANTS’ MOT. TO DISMISS FIRST AM. COMPLAINT; SUPPORTING MEMO. CASE NO.: CV-14-05292-BLF 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Postal Service, the Corporation for Public Broadcasting, and so on.6 After investigating the issues at the heart of this case, Pemex’s Internal Control Body found no bribe. 2. The revisions to Pemex’s complaint. For the court’s convenience, defendants’ counsel prepared a redline of the First Amended Complaint against the original complaint. Ex. A. As the Court can see from the redline, Pemex’s emendations group into essentially four categories: (a) communications and meetings involving Reynaud; (b) trips involving Reynaud; (c) transfers of money; and (d) the December 12, 2008 communications between HP Mexico and HP (U.S.) regional managers. (a.) As for the first category, the new complaint adds a smattering of additional allegations about meetings and communications that are not alleged to have taken place in the United States. Indeed, these meetings and communications variously involved personnel of HP Mexico and Intellego, and presumably took place in Mexico, even though they may have involved discussions about possible trips elsewhere, such as Monaco, Brazil, or the United States. FAC ¶¶ 24, 25, 26, 27, 29, 30, 32, 55, 57. And the complaint offers no detail about what was discussed, only weak, rote conclusions: that the purposes were “to groom and induce,” and “to plan and fuel,” whatever that means. Id. ¶¶ 25, 26, 27, 29, 30, 31, 32; see also id. ¶¶ 153(a)(1), (2), (3), (4), (5). (b.) So too with the second category of allegations—the trips. There are no new trips alleged, only the ones alleged last time—to Monaco, Brazil, Orlando, Miami, and so on. Mostly what is new is some additional calendar-entry-type detail here and there: For example, instead of just saying “three-day forum event in San Francisco,” Original Complaint (“OC”) ¶ 48, Pemex now specifies that the event took place “from at least April 1 to April 3, 2009,” FAC ¶ 56; see also FAC ¶¶ 26, 27, 29, 30, 32, 55, 56, 57, 63, 64. But none of that trivia cures the central defect 6 See Inspector General Act of 1978, 5 U.S.C. App. 3 §§ 2–4 (2012) (describing responsibilities of the Inspector General, including “conduct[ing] and supervis[ing] audits and investigations relating to the programs and operations,” and “to prevent and detect fraud and abuse in, such programs and operations”). Case5:14-cv-05292-BLF Document72 Filed08/21/15 Page14 of 30 DEFENDANTS’ MOT. TO DISMISS FIRST AM. COMPLAINT; SUPPORTING MEMO. CASE NO.: CV-14-05292-BLF 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 of the travel allegations, as identified by the Court: that “Plaintiffs have not pled how these trips violated the Travel Act, or were otherwise quid pro quo for Reynaud’s signing of the contracts.” Op. 16 n.4; see also Op. 20. On that score, instead of just mouthing “quid pro quo,” the new complaint speaks of “groom[ing]”, “induc[ing],” “plan[ning],” and “fuel[ing],” as to the pre-BTO deal trips; and, as to post-signing trips, repeatedly asserts that the purposes were “to reward Reynaud Aveleyra” for the BTO contracts and “to induce and plan additional corrupt schemes.” FAC ¶¶ 55, 56, 57, 63, 64; see also id. ¶¶ 131, 153(a)(6), (7), (8), (9), (10). Again, Pemex just adds verbiage and rhetoric unreasonably inferred from innocuous emails and calendar entries— not facts. Rule 8, of course, requires more than “‘magic words’” to infer an agreement. E.g., Int’l Norcent Tech. v. Koninklijke Philips Elecs. N.V., No. 07–cv–00043, 2007 WL 4976364, at *8 (C.D. Cal. Oct. 29, 2007) (finding allegations of illicit agreement insufficient and noting that, “[a]lthough [plaintiff] added allegations that the [alleged conspirators] ‘combined,’ ‘coerced’ content providers, and ‘actively combated,” “the amendments did not ‘nudge [plaintiff’s] claims across the line from conceivable to plausible’”; quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).7 (c.) Which brings up the third category—the money. The only additional “purpose” ascribed to any of the trips is one about the alleged trip to Cupertino on May 16 through 19, 2009. As to that one, the new complaint adds that one “reason[] for this trip w[as] for Reynaud Aveleyra to receive and collect bribe money in California.” FAC ¶ 57. Needless to say, Pemex doesn’t bother to explain how this conclusion comports with its Internal Control Body’s finding that there was no bribe. In fact, Pemex’s public securities filing eviscerates its amended complaint’s effort to infer a nefarious purpose from an innocuous fact alleged in the prior 7 Plaintiffs’ allegations that these trips even occurred can hardly be considered plausible in light of the carefully phrased allegations in the original complaint—that Reynaud was merely “invited” to attend them. See, e.g., OC ¶¶ 23, 24, 48, 54, 55. The amended complaint offers no new allegations that the trips actually occurred, and instead offers only pure conclusions that they did occur. Case5:14-cv-05292-BLF Document72 Filed08/21/15 Page15 of 30 DEFENDANTS’ MOT. TO DISMISS FIRST AM. COMPLAINT; SUPPORTING MEMO. CASE NO.: CV-14-05292-BLF 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 complaint (an invitation to meet with HP management in California). See OC ¶ 48. But even leaving that aside, the allegation is still just a conclusion—there are no new facts alleged to support it. The only detail alleged is the same as alleged before, and trumpeted at oral argument: that “[a]t the time of these bribery payments, Reynaud Aveleyra had a personal account at California Bank of Commerce, which has offices located in San Jose ….” OC ¶ 51; FAC ¶ 60. To that sentence, Pemex now tacks on the conclusion: “Reynaud Aveleyra received the four bribe payments in California.” FAC ¶ 60. That is sheer speculation. And even if it were true, it would have nothing to do with HP, or even HP Mexico: it was Intellego that made the payments, and there is no allegation that the defendants had any knowledge about Reynaud’s personal bank account, or any dealings with his personal bank. Beyond that, the speculation directly contradicts allegations Pemex itself makes multiple times elsewhere in its complaint: that the four payments were made not to Reynaud personally, but “to an entity controlled by Reynaud Aveleyra,” FAC ¶ 58 (emphasis added), a “Reynaud Aveleyra-controlled entity,” id. ¶ 59; accord id. ¶¶ 153(a), 228; and, not only that, that Intellego made the payments to this “entity controlled by Reynaud Aveleyra … for his use and benefit in Mexico,” id. ¶ 150, 151 (emphasis added). So which is it? Pemex presents speculation, not facts, and self-contradictory speculation at that. (d.) Finally, there is the email exchange and phone call between HP Mexico and HP regional managers on December 12, 2008. There is nothing new here. That email chain was the centerpiece of the DOJ fact statement and the SEC order, and was thus featured prominently in the original complaint. E.g., OC ¶¶ 35, 138(a), (b), 150(a), (b); see also OC/FAC Ex. 1 at A5, id. Ex. 2 at 10. It does not reflect that anyone paid a bribe, and it certainly does not establish “that HP ‘directed the scheme’ from the United States.” Op. 16 (describing “cursory” allegation in OC ¶ 132). Adding quotes from the emails does not change that. See FAC ¶¶ 28, 42, 155. (For the record’s sake, although it makes no substantive difference, it should be noted that Pemex sloppily Case5:14-cv-05292-BLF Document72 Filed08/21/15 Page16 of 30 DEFENDANTS’ MOT. TO DISMISS FIRST AM. COMPLAINT; SUPPORTING MEMO. CASE NO.: CV-14-05292-BLF 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 and repeatedly misreads the email by asserting that ZettingBiz was the “pass-through partner.” E.g., id. ¶ 28. The DOJ’s and SEC’s descriptions of the emails make clear that ZettingBiz was the “Consultant,” and thus affiliated with Intellego.8) 3. The deficiency of the “predicate acts.” In short, the new complaint only highlights Pemex’s failures of pleading. Among other problems with the purported RICO predicates:  Pemex still fails to allege how any of the purported Travel Act predicates (nos. 1–13, 15–17, 19, 21, 23–26) actually “violated the Travel Act, or were otherwise quid pro quo for Reynaud’s signing of the contracts.” Op. 16 n.4; see also 18 U.S.C. § 1952(a) (Travel Act requires “intent to—(1) distribute the proceeds of any unlawful activity; or … (3) otherwise promote, manage, establish, carry on, or facilitate the promotion, management, establishment, or carrying on of any unlawful activity”).  Pemex again fails to plead how it “has been injured in [its] business or property,” Hourani v. Mirtchev, No. 13–7088, 2015 WL 4590324, at *7 (D.C. Cir. July 31, 2015),9 as a result of any of the predicates involving Reynaud’s trips (nos. 1–5, 19, 21, 23–25), or any of the predicate acts involving the avoidance of “internal controls” (nos. 8, 10, 13, 17, 26).  And Pemex once more fails to sufficiently plead that HP or HP Mexico acted with any intent to pay a bribe, both as to the wire fraud predicates (nos. 6–9, 11–12, 14–16, 18, 20, 22), see Eclectic Props. E., LLC v. Marcus & Millichap Co., 751 F.3d 990, 997 8 Compare FAC Ex. 1, at A5 (“HP MEXICO executives sent an e-mail claiming that CONSULTANT deserved an increased commission primarily because it had put in extra work ….”; id. Ex. 2, at 10 (“an HP Mexico sales manager sent an email claiming that the Mexican Consultant deserved an increased commission primarily because it had put in extra work ….”), with Docket No. 58-2 9 Indeed, this is true even of the money-laundering predicates—even if money was ultimately deposited in a U.S. bank account, it was not any such deposit that harmed Pemex. Case5:14-cv-05292-BLF Document72 Filed08/21/15 Page17 of 30 DEFENDANTS’ MOT. TO DISMISS FIRST AM. COMPLAINT; SUPPORTING MEMO. CASE NO.: CV-14-05292-BLF 13 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 (9th Cir. 2014) (wire fraud, 18 U.S.C. § 1343, requires “the specific intent to defraud”), and the money-laundering predicates (nos. 11–12, 14–16, 18, 20–22), see 18 U.S.C. § 1956(a)(2) (money laundering requires “intent to promote the carrying on of specified unlawful activity”). Certainly Pemex does not do so with the particularity required by Rule 9(b) for wire fraud, see Op. 9—and, indeed, it cannot do so in light of its admission that “no improper payment” was made. ARGUMENT Even leaving apart Pemex’s public admission that there was “no improper payment,” the First Amended Complaint must be dismissed: Pemex has failed to cure the multiple independent deficiencies that this Court identified when it dismissed the RICO claims in the original complaint. See Points I, II, and III below. But if any more is needed to dispose of this case, Pemex’s SEC Form 20-F supplies it—a binding admission that Pemex has no case. See Point IV below. I. PEMEX’S RICO CLAIMS ARE STILL IMPERMISSIBLY EXTRATERRITORIAL. A. Pemex still alleges a pattern of racketeering activity that is impermissibly extraterritorial. In its opinion dismissing the RICO claims in the original complaint, this Court agreed that, under Morrison v. National Australia Bank Ltd., 561 U.S. 247, 254–55 (2010), and United States v. Chao Fan Xu, 706 F.3d 965, 978–99 (9th Cir. 2013), RICO does not apply extraterritorially. The Court held that, to state a properly domestic civil RICO claim, Pemex must “allege a cohesive set of predicate acts, taking place in the United States, which show plausibly that the focus of their racketeering activity was domestic.” Op. 14. Pemex must thus “plausibly show[] that the pattern of racketeering activity was domestic,” Op. 16—“that Defendants engaged in a domestic scheme rather than just peripheral or isolated domestic acts,” Op. 17. The Court held that Pemex had failed to meet that standard. The Court held that “the complaint only cursorily allege[d] that HP ‘directed the scheme’ from the United States, and lacks Case5:14-cv-05292-BLF Document72 Filed08/21/15 Page18 of 30 DEFENDANTS’ MOT. TO DISMISS FIRST AM. COMPLAINT; SUPPORTING MEMO. CASE NO.: CV-14-05292-BLF 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 the same widespread allegations of wrongdoing based in the United States” as had been alleged in Reich v. Lopez, 38 F. Supp. 3d 436, 448 (S.D.N.Y. 2014). Op. 16 (citing OC ¶ 132). The Court added that Pemex had also “failed to plead sufficient facts to show that several of Reynaud’s trips suffice as predicate acts,” as Pemex had “not pled how those trips violated the Travel Act, or were otherwise quid pro quo for Reynaud’s signing of the contracts, … and were not instead lawful preparatory acts that cannot be considered part of a pattern of racketeering activity.” Op. 16 n.4. Still, the Court gave Pemex “leave to amend to allege additional facts to show that the pattern of activity in the alleged scheme was domestic.” Op. 17. The amendment, however, fails to move the domesticity needle at all. There is no new factual allegation that plausibly establishes “that HP ‘directed the scheme’ from the United States,” or that turns “peripheral or isolated domestic acts” into “widespread … wrongdoing based in the United States.” Op. 16, 17. In particular, the allegations about Reynaud’s travel are still deficient. Pemex’s colorful but utterly conclusory language—about “groom[ing]” and “induc[ing]” and “fuel[ing]” and “plan[ning]” and “reward[ing]”—adds nothing factual that wasn’t in the complaint before. Even if the travel could somehow be said to violate the Travel Act—and it still can’t—it would still be peripheral to the alleged scheme. There remains nothing to support the notion that the supposed scheme was directed from the United States. As before, the December 12 emails and phone call certainly still show nothing of the sort. As the emails themselves (submitted by Pemex on the prior motion) show, and as the DOJ and SEC found, the HP Mexico representatives precipitated those exchanges—and got approval for a 1.5% increase in a commission by concealing the existence of the pass-through partner from middle managers at HP in the U.S. See Docket Nos. 58-2, 58-3; FAC Ex. 1 at A5, FAC Ex. 2 at 10. And what they got from the mid-level regional U.S. people was not authorization for any bribe, but authorization to pay a supposedly hardworking consultant a little bit more. Again, peripheral, not widespread, and certainly not evidence of a scheme directed from the United States. Case5:14-cv-05292-BLF Document72 Filed08/21/15 Page19 of 30 DEFENDANTS’ MOT. TO DISMISS FIRST AM. COMPLAINT; SUPPORTING MEMO. CASE NO.: CV-14-05292-BLF 15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Finally, Pemex’s claim that Reynaud used one trip to California to collect money from a personal bank account is, as noted above, utterly conclusory, contradicted by multiple allegations in the complaint itself (allegations that say that the pass-through partner transferred money to a Reynaud-controlled “entity controlled … for his use and benefit in Mexico,” FAC ¶ 150, 151), and doesn’t involve any wrongdoing by HP (because HP is not alleged to have had any knowledge or dealings with Reynaud’s alleged personal account). See p. 11, above. In any event, even if the allegation of money in a U.S. account were plausible, it wouldn’t matter: As this Court noted, “to the extent the Bank of China fraud [in Chao Fan Xu] ‘was predicated on extraterritorial activity, it is beyond the reach of RICO even if the bank fraud resulted in some of the money reaching the United States.’” Op. 13 (quoting Chao Fan Xu, 706 F.3d at 978); accord, e.g., Hourani v. Mirtchev, 943 F. Supp. 2d 159, 164, 167–68 (D.D.C. 2013) (cited with approval at Op. 15), aff’d on other grounds, No. 13–7088, 2015 WL 4590324 (D.C. Cir. July 31, 2015). So too here: even if the supposed Mexican bribery scheme resulted in money reaching the United States, it would still be beyond the reach of RICO. See Mem. ISO Defs.’ Mot. to Dismiss Compl. (“Mot. to Dismiss”) (Docket No. 31) at 11–13, 15; Defs.’ Reply Mem. ISO Mot. to Dismiss Compl. (“Reply”) (Docket No. 41) at 10–11. Accordingly, Pemex’s complaint still “lacks the same widespread allegations of wrongdoing based in the United States as the court found in Reich.” Op. 16. In Reich, the individuals who orchestrated the alleged scheme, defendants Betancourt and D’Agostino—who were “founder[s],” “principal[s], “owner[s],” and “operator[s]” of the corporate defendants— “own[ed] residential property in New York and reside[d] there for part of the year, including during the time period of the alleged illegal activities.” 38 F. Supp. 3d at 444. There is nothing like that here. The two individuals “conduct[ed] and manage[d] the day-to-day affairs of [their businesses] from their office in New York.” Id. That didn’t happen here. They unsuccessfully tried to bribe the plaintiff, Reich, an American, presumably in the United States, in connection with Reich’s work on a lawsuit in the United States. Id. Not so here. And from the United Case5:14-cv-05292-BLF Document72 Filed08/21/15 Page20 of 30 DEFENDANTS’ MOT. TO DISMISS FIRST AM. COMPLAINT; SUPPORTING MEMO. CASE NO.: CV-14-05292-BLF 16 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 States, they made phone calls conveying false information about the American plaintiff, causing him economic harm. Id. at 445, 448. Again, not this case.10 To the contrary, Pemex still claims a predominantly foreign scheme: that, to get a contract in Mexico for software and services in Mexico, Mexican personnel of a Mexican company, in Mexico, bribed a Mexican official of the Mexican state oil company, by paying, through a Mexican pass-through partner, money to a Mexican consultant, some of which the Mexican consultant, in turn, paid to a Mexican “entity controlled” by the Mexican official—all “for his use and benefit in Mexico.” FAC ¶¶ 150, 151. The RICO claims must still be dismissed. B. Pemex still alleges impermissibly extraterritorial losses. That suffices to dispose of Pemex’s RICO claims, but there is more to say on extraterritoriality—about Pemex’s failure to plead a domestic injury. See Mot. to Dismiss at 16– 18; Reply at 1–4. The Court, of course, found defendants’ argument on this issue to be “facially appealing” but “ultimately unpersuasive,” Op. 22, but defendants nonetheless respectfully seek to preserve it, and to make a quick point about it here. The Court “grant[ed] Plaintiffs leave to amend in order to allege additional facts that would show a domestic injury,” Op. 23, and Pemex has apparently replied to that invitation by claiming that Reynaud received money in the United States, FAC ¶ 138, and by claiming that his trips to the United States “robb[ed] Plaintiffs of Reynaud Aveleyra’s faithful and honorable services in the United States,” id. ¶ 139. The first 10 Although the First Amended Complaint fails to allege the quantum of domestic activity alleged in Reich, the fact remains that Reich applied a more generous extraterritoriality standard for plaintiffs than the law of this Circuit allows. That is because Reich followed European Community v. RJR Nabisco, Inc., 764 F.3d 129 (2d Cir.), panel reh’g denied, 764 F.3d 149 (2d Cir. 2014) (per curiam), reh’g en banc denied, 783 F.3d 123 (2d Cir. 2015), pet. for cert. filed, No. 15–138 (U.S. July 27, 2015). Reich, 38 F. Supp. 3d at 447–48. As the D.C. Circuit has now observed, and as the Second Circuit en banc dissenters in European Community explained, the panel decision in European Community squarely conflicts with the Ninth Circuit’s decision in Chao Fan Xu. Hourani v. Mirtchev, 2015 WL 4590324, at *6 n.2 (“The courts of appeals have split on the issue”); European Cmty., 783 F.3d at 130, 132, 139 (Raggi, J., dissenting from denial of rehearing en banc); id. at 129–30 (Cabranes, J., dissenting from denial of rehearing en banc). Case5:14-cv-05292-BLF Document72 Filed08/21/15 Page21 of 30 DEFENDANTS’ MOT. TO DISMISS FIRST AM. COMPLAINT; SUPPORTING MEMO. CASE NO.: CV-14-05292-BLF 17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 allegation has already been addressed: the claim that Reynaud got money in the United States is factually baseless and contradicted elsewhere in the complaint. See pp. 10–11, 15, above. The second is answered by the law: “To demonstrate injury for RICO purposes, plaintiffs must show proof of concrete financial loss, … and the deprivation of ‘honest services’ does not constitute concrete financial loss.” Ove v. Gwinn, 264 F.3d 817, 825 (9th Cir. 2001); accord, e.g., United States v. Kincaid-Chauncey, 556 F.3d 923, 941 n.14 (9th Cir. 2009); Mattel, Inc. v. MGA Entm’t, Inc., 782 F. Supp. 2d 911, 1021–22 (C.D. Cal. 2011). II. PEMEX STILL FAILS TO ALLEGE A PATTERN OF RACKETEERING ACTIVITY. Even if Pemex’s RICO claims were not impermissibly extraterritorial, the amended complaint should be dismissed because Pemex has still failed, as this Court found on the earlier motion, “to plead sufficient facts to show either closed- or open-ended continuity, and to plead that the HP Russia, HP Poland, and HP Mexico schemes were sufficiently related to form a global pattern.” Op. 21. A. Pemex still fails to allege a related “global scheme.” This Court rejected Pemex’s original attempt to cobble together its so-called “global scheme” because Pemex had failed to establish “a relationship between the predicates” comprising the three disparate schemes. Op. 17 (internal quotation marks omitted). Pemex had failed to show how “the HP Poland and HP Russia schemes … are similar to the HP Mexico scheme.” Op. 19. Pemex has still failed to do so. The First Amended Complaint fails to plead a single new fact linking the three schemes together. See Ex. A ¶¶ 76–116 (redline comparison of complaint and amended complaint). Instead, to elide the absence of new facts, Pemex has essentially submitted a section of a brief— six lengthy but conclusory paragraphs purporting to draw parallels between the facts previously alleged in the complaint. See FAC ¶ 166–171. But the facts are still the same—the same facts this Court has already deemed insufficient to establish relatedness. Op. 18–19. These six new paragraphs consist entirely of legal conclusions; they do nothing to establish that these were Case5:14-cv-05292-BLF Document72 Filed08/21/15 Page22 of 30 DEFENDANTS’ MOT. TO DISMISS FIRST AM. COMPLAINT; SUPPORTING MEMO. CASE NO.: CV-14-05292-BLF 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 anything but “three factually distinct bribery schemes.” Op. 19. Pemex’s effort to tie the schemes together based on the government investigations is equally futile. As explained above, each of the three HP subsidiaries entered a separate agreement with the DOJ—and as against HP Russia and HP Poland in particular, the DOJ brought separate criminal cases that wound up before separate district judges in this District. See p. 7 & n.1, above. The fact that the United States considered the HP Mexico, HP Russia, and HP Poland schemes to involve three separate cases demonstrates that there was no “relationship between the predicate[]” acts years earlier. Op. 17 (internal quotation marks omitted). Likewise shy of the mark is Pemex’s superficial effort to repackage its claim that the three schemes were coordinated by HP. Pemex now claims that HP “communicated” “the knowledge that each of its members acquired” in Poland and Russia to HP Mexico. Compare FAC ¶ 163 with OC ¶ 146. That is another raw conclusion: As with the original complaint, Pemex does not allege what actions HP took to direct the purported enterprise, or what HP supposedly “communicated” to its subsidiaries. Pemex can’t allege that: as the DOJ and SEC fact statements incorporated into the complaint make clear, HP did not know of the isolated instances of misconduct at HP Russia, HP Poland, or HP Mexico. FAC Exs. 1, 2. Pemex’s claims remain legally insufficient: they “give[] the Court no information as to the form or structure of that enterprise, the ways in which decisions are made in the enterprise, or even the hierarchy of the alleged actors in the enterprise.” Mohebbi v. Khazen, 50 F. Supp. 3d 1234, 1254 (N.D. Cal. 2014). B. Pemex still fails to allege open-ended continuity. As for the alleged Mexico scheme, the Court dismissed Pemex’s open-ended continuity claims because the complaint failed to “ple[a]d facts to suggest that similar conduct will occur in the future.” Op. 19. This ruling applies equally to the amended complaint, which again describes “a series of events that were undertaken to effectuate a single scheme, with two individuals—the COO and Reynaud” who “are no longer employed by Pemex.” Op. 19. Case5:14-cv-05292-BLF Document72 Filed08/21/15 Page23 of 30 DEFENDANTS’ MOT. TO DISMISS FIRST AM. COMPLAINT; SUPPORTING MEMO. CASE NO.: CV-14-05292-BLF 19 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Pemex’s attempt to plead around the Court’s ruling by alleging that racketeering was the enterprise’s “regular way of doing business” is unavailing. FAC ¶ 155. On its face, the amended complaint alleges a series of acts relating to a single commercial transaction—the signing of the BTO contracts. The law in the Ninth Circuit is clear and directly on point: “predicate acts designed to bring about a single event (the signing of [a] contract) d[o] not pose a threat of continuity.” Sever v. Alaska Pulp Corp., 978 F.2d 1529, 1536 (9th Cir. 1992).11 Recognizing this problem, Pemex insists that “additional corrupt schemes” were in the works. See, e.g., FAC ¶¶ 56, 57, 63, 64, 131. But Pemex fails to provide any details that could render this allegation remotely possible, including who was involved, what products were at issue, or when these additional schemes allegedly occurred. Indeed, the only support Pemex can muster for its claim that there were other potential contracts on the horizon is a strained reading of one of the December 12 emails. See Docket Nos. 58-2, 58-3 (December 12 emails). In that email, HP Mexico sought authorization from HP to increase Intellego’s fee by 1.5% based on its successful management of the deal, including “discounts” FAC ¶ 42 (quoting Docket No. 58-2). Contrary to Pemex’s assertions, nothing about this statement suggests that “ ” Id.; see also id. at ¶ 155. There isn’t even a hint of illicitness in the exchange. Like any business, when HP sells software to a client, it does so with the expectation that it will be able to compete for future business opportunities. 11 See also Howard v. Am. Online Inc., 208 F.3d 741, 750 (9th Cir. 2000) (“Plaintiffs present no facts indicating that misleading advertising would continue into the future, particularly given that the problems stemmed from a one-time change in pricing policy.”); Schneider Rucinski Enters. v. Stratasoft, Inc., No. 08–cv–138–WQH, 2009 WL 559827, at *10 (S.D. Cal. Mar. 3, 2009) (“[T]he pattern of racketeering activity is related to a single transaction in which a single victim is alleged to have been defrauded. … Since the only goal of the defendants was to ‘defraud [the plaintiff’s corporation],’ any threat of continuing racketeering ceased when Plaintiff sent the purchase money to defendants.”). Case5:14-cv-05292-BLF Document72 Filed08/21/15 Page24 of 30 DEFENDANTS’ MOT. TO DISMISS FIRST AM. COMPLAINT; SUPPORTING MEMO. CASE NO.: CV-14-05292-BLF 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 . Given this more plausible reading of the email, Pemex’s interpretation “do[es] not plausibly establish [its] purpose.” Ashcroft v. Iqbal, 556 U.S. 662, 681 (2009). Further grasping at straws, Pemex alleges that the fact that HP and HP Mexico agreed to implement additional FCPA safeguards as a condition of entering the non-prosecution agreement with the DOJ suggests that the government believed there was an “ongoing threat of repetition.” FAC ¶¶ 156, 177. This claim fails on the face of the agreement. One of the bases for the DOJ’s entry into the non-prosecution agreement was the fact that defendants had already implemented “extensive remediation” measures before entering the settlement, including “enhancing their due diligence protocol … and enhancing their controls for payment of sales commissions to channel partners in Mexico.” FAC Ex. 1, at 1. Defendants’ enhanced internal controls and procedures made the threat of repetition less likely. C. Pemex still fails to allege closed-ended continuity. This Court found that the original complaint alleged, at most, a seven-month period over which the predicate acts occurred: December 2008 until June 2009. As the Court has already held, this is “insufficient for purposes of closed-ended continuity,” which requires a showing that the predicate acts occurred over “a substantial period of time.” Op. 20–21. The amended complaint contains the same defect. In particular, Pemex’s attempt to stretch the scheme back to January 2008 fails on its own terms. Although it alleges some sporadic communications between HP Mexico and Reynaud in early 2008, the amended complaint alleges that the first BTO-related meeting occurred on March 31. FAC ¶¶ 24–25. More fundamentally, Pemex was unable to plead any predicate act before the contracts were signed in December 2008. As the Court made clear, Pemex was required to show “how … the pre-contract travel by Reynaud to the United States [] violated the Travel Act.” Op. 20. Pemex has again failed to do so. Instead, the complaint cursorily alleges that, beginning in mid- April 2008, HP and HP Mexico offered Reynaud a series of trips with the purpose of “groom[ing]” him to accept additional trips and to “induce him to award the BTO Contracts to Case5:14-cv-05292-BLF Document72 Filed08/21/15 Page25 of 30 DEFENDANTS’ MOT. TO DISMISS FIRST AM. COMPLAINT; SUPPORTING MEMO. CASE NO.: CV-14-05292-BLF 21 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 HP and HP Mexico.” FAC ¶¶ 25–27. This all remains utterly conclusory. Pemex offers no factual support establishing that any of these trips concerned BTO services, let alone a potential bribe for the contracts. Pemex still doesn’t even offer factual support for the conclusion that these trips even occurred. See p. 10, n.7, above. Beyond that, the same problems plague Pemex’s post- signing allegations as well: For example, Pemex’s repeated refrain that each post-December 2008 trip was paid for “with the intent to improperly reward Reynaud Avelyera … and to plan and induce additional corrupt schemes,” FAC ¶¶ 153(a)(6), (7), (8), is equally conclusory and insufficient. III. PEMEX’S RICO CLAIMS ARE TIME-BARRED. The Court granted Pemex leave to amend the complaint to “show that Reynaud and the COO ‘completely abandoned’ Pemex”—that is, to “plead facts that plausibly show that Reynaud and the COO were acting wholly for their own benefit and not also for the benefit of Pemex.” Op. 24–25 (first emphasis added). Despite this directive, the best Pemex could come up with is the cursory statement that the “sole, objective, intent and motivation for [Reynaud and the COO] to enter into the BTO contracts was to steal $4 million to personally enrich themselves and their co-conspirators.” FAC ¶ 70.12 This fails as a matter of law. There is no plausible, factually supported allegation that Reynaud and the COO were not acting at least in part for Pemex’s benefit in securing the BTO deal from HP Mexico. In particular, Pemex does not plead—and cannot plead—that it did not receive the full value of the products and services that Reynaud and the COO secured for Pemex’s benefit while acting on Pemex’s behalf. To the contrary, Pemex concedes (as the DOJ found) that those valuable 12 Pemex’s claim that the enterprise stole $4 million is a red herring. That figure is just the rounded sum of HP’s alleged proceeds from the BTO contracts—$2.52 million—and the $1.66 million received by Intellego, the Pass-Through Partner, and Reynaud. FAC ¶ 71. As the government found, Reynaud received payments totaling approximately $125,000, FAC Ex. 2 ¶ 48, none of which is alleged to have come from Pemex’s coffers. But even taking Pemex’s $4 million calculation as fact would mean that Reynaud and the COO, acting for Pemex, secured at least $2 million in BTO services for Pemex’s benefit. Case5:14-cv-05292-BLF Document72 Filed08/21/15 Page26 of 30 DEFENDANTS’ MOT. TO DISMISS FIRST AM. COMPLAINT; SUPPORTING MEMO. CASE NO.: CV-14-05292-BLF 22 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 products and services were worth at least $3.47 million. See FAC ¶ 135–37 (alleging that HP earned $2.53 million on $6 million price). Nor does Pemex allege that the products and services provided by HP Mexico were in any way defective. “[A]lthough [Reynaud’s] motives may have been entirely self-serving,” his knowledge should be imputed to Pemex because it “arguably benefited from the transaction[].” In re Am. Cont’l Corp./Lincoln Sav. & Loan Sec. Litig., 794 F. Supp. 1424, 1463 (D. Ariz. 1992). Pemex tries to salvage its abandonment claim by alleging that “[t]he services provided in the BTO contract were not essential” and that Pemex “would have been far better off without these services than they were by overpaying for them.” FAC ¶ 72. According to Pemex, Reynaud’s failure to seek a better deal or to forgo it entirely is evidence of abandonment. Id. ¶ 70. But the Court has already rejected this kind of conclusory allegation. Why, exactly, were the services non-essential? On what basis would Pemex have been better off without them? How do we know that Reynaud did not consider alternatives to the deal? Pemex offers no answers. Putting aside Pemex’s inability to plead complete abandonment, the amended complaint is untimely for a second, independent reason: it fails to allege anything about Reynaud’s June 2009 resignation and why it did not provide Pemex with “enough information to warrant an investigation which, if reasonably diligent, would have led to discovery” of the alleged injury. Pincay v. Andrews, 238 F.3d 1106, 1110 (9th Cir. 2001). Reynaud’s June 5, 2009 resignation was widely reported in Mexican and U.S. news sources, as were the reasons for his resignation.13 According to contemporaneous sources, Reynaud resigned as CIO following public reports that he accepted a bribe—an all-expense paid trip to Monaco—from SAP, a German software 13 See, e.g., Robert Campbell, SAP Denies Wrongdoing in Pemex Formula 1 Case, Reuters, June 8, 2009, http://reut.rs/1Powk7n; Carolina Gómez, Inhabilitará la SFP a Ex Funcionario de Pemex, LA JORNADA, June 6, 2009, http://bit.ly/1NHRHA5; Alma Hernández, Disfruta Premio, Pero Deja Cargo, MURAL, June 6, 2009, 2009 WLNR 10880469; David Biller, Pemex Official Resigns in Wake of Corruption Allegation, BNAMERICAS.COM, June 5, 2009, http://bit.ly/1JtpRdd. Case5:14-cv-05292-BLF Document72 Filed08/21/15 Page27 of 30 DEFENDANTS’ MOT. TO DISMISS FIRST AM. COMPLAINT; SUPPORTING MEMO. CASE NO.: CV-14-05292-BLF 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 company, in exchange for granting SAP a technology contract.14 Pemex makes no effort to plead around these facts. There is still no explanation as to why Pemex was “in the dark” about its alleged injury, or why a diligent investigation could not have uncovered it. June 25 Hearing Transcript at 43 (Docket No. 57). Because Pemex had actual or constructive knowledge of its injury long before December 2010, the Court should dismiss Pemex’s claims as barred by the statute of limitations. IV. EVEN APART FROM PEMEX’S FAILURE OF PLEADING, THE COURT SHOULD DISMISS THE COMPLAINT IN LIGHT OF PEMEX’S ADMISSION THAT THERE WAS NO BRIBE. Each of the above deficiencies—Pemex’s failure to allege a domestic scheme or injury, its failure to plead a pattern of racketeering, and its complaint’s untimeliness—provides an independent basis to dismiss the complaint even without reference to Pemex’s statement in its latest Form 20-F that there was “no improper payment” to Reynaud. Pemex’s admission that there was no bribe provides an additional reason to dismiss the complaint with prejudice. The law is clear that the Internal Control Body’s conclusion that there was “no improper payment” binds Pemex. As the court held in L-3 Commc’ns Integrated Sys., L.P. v. United States, 91 Fed. Cl. 347 (2010), amended in part on other grounds on reconsideration, 98 Fed. Cl. 45 (2011), conclusions of one arm of a government agency are binding on the rest of the agency under Federal Rule of Evidence 801(d)(2)(D) as “admissions by a party-opponent.” 91 Fed. Cl. at 359. Thus, in L-3, the court found that a report of the inspector general summarizing its 14 The law is clear in this Circuit that “media reports” like those cited above “are judicially noticeable documents provided they are not considered by the Court for the truth of their content, but rather for the fact that the reports were made.” United States v. Kiewit Pac. Co., No. 12–cv– 02698–JST, 2013 WL 5770514, at *5 (N.D. Cal. Oct. 24, 2013); see also Von Saher v. Norton Simon Museum of Art at Pasadena, 592 F.3d 954, 960 (9th Cir. 2009) (taking judicial notice of “various newspapers, magazines, and books … introduced to indicate what was in the public realm at the time” (internal quotation marks omitted)). Here, it is enough to take note of the fact of Reynaud’s resignation and widespread media reports suggesting that he resigned after accepting a bribe in connection with a software contract. These reports were sufficient to put Pemex on notice of its need to investigate Reynaud’s recent dealings. Case5:14-cv-05292-BLF Document72 Filed08/21/15 Page28 of 30 DEFENDANTS’ MOT. TO DISMISS FIRST AM. COMPLAINT; SUPPORTING MEMO. CASE NO.: CV-14-05292-BLF 24 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 findings regarding the Air Force’s procurement practices constituted an admission by the Air Force. The same logic applies here: The finding by Pemex’s Internal Control Body that there was “no improper payment” is binding on plaintiffs as an admission of Pemex.15 This admission is fatal, as it renders each of Pemex’s claims irredeemably implausible:  There was no pattern of predicate acts. The thesis of the complaint is that “Defendants … engaged in a pattern of racketeering designed to bring Pemex officials to the United States … to groom and induce them to accept corruption and entirely abandon their employer by stealing money from Pemex.” FAC ¶ 3. This claim falls apart if there was “no improper payment,” as there could be no quid pro quo or theft from Pemex.  Pemex suffered no injury. Pemex alleges that, in exchange for the alleged bribes, Reynaud agreed to a contract “at inflated prices.” FAC ¶ 57. Because there was “no improper payment,” any alleged overpayment by Pemex was not a result of any bribe to Reynaud.  There was no illegal conduct sufficient to sustain Pemex’s state-law claims. The court sustained Pemex’s state-law claims based on its allegation that HP sent “an email authorizing an increased bribe payment” from California, and “payment of such bribes [were made] through a United States bank account.” Op. 25 (emphasis added). Because Pemex has admitted there was no bribe, there were no “illegal acts taking place in California,” and the claims fail. Op. 25. 15 Separate and apart from the statement’s admissibility under Rule 801, the Court can also take judicial notice of Pemex’s Forms 20-F for the truth of the matter asserted because they incorporate “admission[s] … that bear[] substantially upon the legal sufficiency of [the] complaint.” 5-Star Mgmt. Inc. v. Rogers, 940 F. Supp. 512, 519 (E.D.N.Y. 1996); see also Flint v. Beneficial Fin. I Inc., No. 12–cv–01675–GEB, 2012 WL 3277109, at *3–4 (E.D. Cal. Aug. 9, 2012) (considering an admission made by plaintiff in a related state court proceeding for the truth of the matter asserted and dismissing the complaint on that basis). Case5:14-cv-05292-BLF Document72 Filed08/21/15 Page29 of 30 DEFENDANTS’ MOT. TO DISMISS FIRST AM. COMPLAINT; SUPPORTING MEMO. CASE NO.: CV-14-05292-BLF 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CONCLUSION For all of these reasons, Pemex has failed to cure the deficiencies of its RICO claims in accordance with this Court’s prior opinion. It thus has failed to allege a viable RICO claim, and, without a proper federal claim, the Court should not exercise jurisdiction over Pemex’s pendent state-law claims.16 The complaint should be dismissed in its entirety, this time with prejudice, and without leave to amend. WACHTELL, LIPTON, ROSEN & KATZ By: George T. Conway III Caroline A. Olsen 51 West 52nd Street New York, New York 10019 Telephone: (212) 403-1000 Facsimile: (212) 403-2000 BERGESON, LLP Daniel J. Bergeson Caroline McIntyre John D. Pernick 2033 Gateway Place, Suite 300 San Jose, California 95110 Telephone: (408) 291-6200 Facsimile: (408) 297-6000 Attorneys for Defendants Hewlett-Packard Co. and Hewlett-Packard Mexico, S. de R.L. de C.V. Dated: August 21, 2015 16 E.g., Alda v. SBMC Mortg., No. 11–cv–00678–LHK, 2012 WL 10589, at *6 (N.D. Cal. Jan. 3, 2012) (declining to exercise supplemental jurisdiction over state-law claims after granting motion to dismissing all federal claims). To preserve their rights on appeal, defendants continue to assert that Pemex has not stated a claim under California’s Unfair Competition Law because it has failed to adequately allege that an illegal act occurred within California. See Mot. to Dismiss at 25. Case5:14-cv-05292-BLF Document72 Filed08/21/15 Page30 of 30